Written by: Techub News Compilation

In a recent sharing session at Y Combinator, Brandon, co-founder and CEO of grocery retail technology company Vori, announced the completion of a $22 million Series B funding round led by Cherry Rock Capital and shared in-depth how the company is penetrating this $1.5 trillion traditional industry that still relies heavily on paper processes. As a third-generation "grocery person," Brandon's entrepreneurial story is not only one of technological disruption but also reveals a unique path to building trust and achieving product-market fit in the physical industry.

Identifying the "Paper and Pencil" Pain Points in a Trillion-Dollar Market

Vori is a company that provides integrated point-of-sale (POS) and store management systems for supermarkets. Brandon first outlined the enormous market scale: there are over 220,000 food and beverage retailers in the United States, with an annual total transaction volume reaching $1.5 trillion. However, this industry, which is larger than the restaurant and hotel sectors, has a surprisingly low level of operational modernity.

Brandon's entrepreneurial inspiration came directly from his family background. His parents worked in the grocery industry for 40 years, and his grandparents also ran a small store in Oklahoma. During a visit home, his parents showed him a stack of paper invoices and product catalogs from 2019, which stunned him. "It was 2020, and I thought these were 'artifacts' from their younger days, little did I expect that this was the current state of the world's largest undigitized retail sector," Brandon recalled. The most frequent consumer behaviors in this industry are still driven by paper, pencils, fax machines, and paper clips.

This contrast was further amplified during discussions with co-founders Trey and Rob. Rob, who previously worked at SpaceX, described an ironically striking scene: there was a grocery store right across the street from SpaceX headquarters. On one side was cutting-edge technology for rocket recovery, while on the other side, businesses were still using clipboards to manage inventory. "Same planet, same ZIP code, one company is transforming other planets, while grocery stores—the places that nurture Earth's civilization—remain so outdated."

It was this strong contrast that motivated them to tackle this problem, which began their entrepreneurial journey. They brought that thick stack of paper documents to the YC interview and slammed it on the table, visually demonstrating the industry's pain points, ultimately successfully entering the YC incubator.

From "Wedge Product" to Full-Stack Operating System: A Four-Year R&D Expedition

At the start of their venture, the team chose a specific "wedge" to enter: helping grocery stores digitize replenishment from wholesale suppliers, replacing paper and fax machines. They developed a simple mobile application in a couple of weeks.

The process of acquiring the first batch of customers was characterized by the traits of an old-school industry: relationships, trust, and persistence. The team's approach involved personally visiting stores to study shelves, seeking out store owners, and day after day making visits until they were ready to sit down for a discussion. One of their earliest customers was Edgewood Market in Palo Alto. The owner initially did not believe that this group of young people could solve any problems, but was moved by their persistence and eventually shared their biggest pain points: inventory management and replenishment.

For a grocery store, the number of SKUs is not in the hundreds or thousands but ranges from 50,000 to 100,000, which need to be sourced from hundreds or even thousands of different suppliers. Managing all of this with a clipboard is not only time-consuming but also prone to errors—either forgetting to order, resulting in empty shelves, or over-ordering, leading to fresh food being thrown away.

The team documented the needs and then returned to their garage in East Palo Alto, coding furiously for 11 days to create an MVP (minimum viable product) specifically for dairy orders. When they showcased the product to the dairy buyer at the store, Haime, a dramatic moment unfolded: Haime stopped using it and looked at the three founders, saying, "Guys, I have goosebumps, I've never seen anything like this." Then, the over six-foot tall Haime gave Rob a "bear hug," even lifting him off the ground. Brandon said that at that moment they knew that despite the product being small, it was significant. This perfectly aligned with the YC philosophy of "finding 10 users who love you, rather than 1,000 who like you."

However, expanding from a successful "wedge product" to a complete store operating system was a long and arduous journey. From 2020 to 2024, Brandon described it as an intensive "R&D expedition." The barriers in the grocery industry are extremely high: it requires handling government payment types (such as food stamps), and the number of SKUs is several orders of magnitude higher than that of restaurants or cafes, with complex regulations.

The team spent four years, from design partners in western Colorado to store visits in Amsterdam, gaining a global perspective to build a "standard operating system" applicable to global food retail. The product gradually expanded from the ordering application that Haime loved into a full-stack system with five core modules: point of sale (POS), payment processing, inventory management, customer marketing, and dynamic pricing. Brandon emphasized that it is the combination of these five parts that enables the goal of doubling grocery store net profitability.

Making the decision to leap from an "application" to a hybrid startup of "hardware + payment + operating system" was challenging. Brandon recalled that YC's Michael Seibel pointed out the key: where do grocery stores spend the most on technology? The answer is on POS, payment processing, and store operating systems. Therefore, they had to build in this direction.

Sales Philosophy: Tightly Linking P&L to Achieve "Heart Transplants"

When Vori attempted to replace existing POS systems in stores with its full-stack system, the challenge was immense. Brandon described this as akin to asking for a "heart transplant." Their success stemmed from tying everything closely to the grocery store's profit and loss statement (P&L).

Vori's formula focuses on three key levers: sales revenue, gross margin, and labor costs. They demonstrated to store owners that Vori could bring about a 20-25% net sales growth, increase the gross margin by 7-10 percentage points (equivalent to a 25% boost), and automate to free employees from low-value tasks such as tagging prices or organizing paper documents, allowing them to serve customers instead.

When these values are aggregated, Vori becomes the best investment that store owners can make. A grocery operator with 20 years of experience told Brandon that Vori is his best investment in two decades. Therefore, convincing store owners to undergo a "heart transplant" became a simple decision. Currently, Vori's median sales cycle is about 18-21 days, with a median deployment cycle of about 37 days, reflecting a purchasing speed similar to small and medium-sized enterprises and even consumer goods, yet with the complexity and stickiness of enterprise-grade software.

The Triple Role of AI: Empowerment, Efficiency, and Competitive Moat

Artificial intelligence plays a central role in Vori's development. Brandon summarized three major values brought by AI:

1. Enhancing Product Value Proposition: Vori's products are driven by three agents capable of acting autonomously for grocery stores.

• Inventory Agent: Automatically generates orders when replenishment is needed or creates personalized offers to increase the average transaction value.
• Marketing Agent: Automatically generates personalized promotions.
• Pricing Agent: This is the most powerful aspect. In the face of rising commodity costs due to tariffs and inflation, Vori can automatically identify price changes from invoices, update shelf prices through electronic price tags, and ensure that customers pay the correct price at checkout. The entire process is completed in one step, whereas before it required up to 12 internal steps.

2. Improving Operational Efficiency: Internally, Vori has fully adopted AI assistance, significantly shortening development cycles. On the sales side, even sales representatives win deals by writing code.

3. Building a Competitive Moat: Brandon sees a "divergence" in the AI field. On one side, there are "thin AI packaged" software that serves digital work, which may cost close to zero; on the other side is the AI that serves physical industries. Vori belongs to the latter, being a "capital-intensive, low obsolescence" hybrid business combining hardware, AI-native software, payments, government regulation, and physical operations. This means that the cost for Vori to win is decreasing, while the cost for others to catch up is increasing.

He is very optimistic about startups serving pillars of the American economy (such as healthcare and food) and referenced the concept of "physical AI." He believes that every technological innovation unlocks new forms of retail, and AI will usher in the next generation of retail giants. Currently, a "race for $1.5 trillion" is quietly underway—Walmart and Amazon, two of the world's most rigorously operated companies, are betting the future trillion-dollar value on the transformation of grocery retail. Walmart has recently submitted over 50 retail AI patents, while Amazon is vigorously expanding physical grocery by acquiring Whole Foods, launching Amazon Fresh, and implementing "Just Walk Out" technology. These two companies hold about 25% of the market share, while the remaining 75% (more than 200,000 stores) lack the technological support that Walmart and Amazon have. Vori's mission is to help these small and medium-sized grocery retailers compete with the giants.

Valleys and Turning Points: "Don't Mess Up the Dairy Orders"

The entrepreneurial journey has not been smooth. Brandon shared a low point moment, leading to a principle within the company: "Don't mess up the dairy orders." This stemmed from their extreme pursuit of reliability, as grocery stores are critical infrastructure for communities, and Vori is key infrastructure for these grocery stores.

Once, their system malfunctioned, causing a significant client's dairy orders at Molly Stones to fail to be successfully submitted to suppliers. When they received a call at 5 a.m., the team realized the gravity of the situation: if mothers in the community could not buy milk and eggs, it would directly affect residents' lives, and as dairy is a "loss leader," a stockout would also impact sales of other categories and destroy Vori's reputation as a company just six months old.

The team enacted "superhero-like customer service." They rented a refrigerated truck that morning, drove to major stores like Whole Foods, and re-sourced all dairy products from the shelves according to orders, filling five shopping carts with milk, eggs, and cheese, and delivered them promptly to Molly Stones. This crisis management not only preserved the client but also spread the story among customers, earning Vori more trust. Brandon summed up that the competitive advantage of startups often lies not in having the best product or the largest team, but in this “showing up” and “caring” attitude—founders sharing their cell phone numbers with clients and promising to solve problems at any time, binding their survival to the success of their customers.

Future Vision: Building a "Clearinghouse" for the Global Food Supply Chain

Vori's short-term goal is to achieve $100 million in annual recurring revenue, which requires acquiring the top 3,000 stores through existing products. The long-term vision is to build a "trade clearinghouse for the global food supply chain."

Brandon painted a future picture of "autonomous grocery stores." This does not mean replacing humans, but enhancing them by stripping away meaningless physical labor from the business. Future grocery stores will become a comfortable "third space" for consumers. Data shows that Generation Z is more inclined than Millennials to shop in grocery stores, and some even host speed-dating activities in grocery stores.

The "autonomous grocery store" will encompass three layers:

• Record System Layer: This is ERP, managing all data related to suppliers, inventory, pricing, etc., in one ledger with one login. (Vori has achieved this)
• Action System Layer: This is the intelligent agents, using the above data to take action in pricing, inventory, and marketing, making money for the store and saving time.
• Transaction System Layer: This handles every dollar flowing in and out of the store. Currently, Vori manages incoming funds through payment processing (which accounts for 60% of its revenue), and in the future, it will expand to help stores pay suppliers, obtain financing for new store openings or adding new departments, and ultimately integrate more financial services.

Brandon believes that this future will gradually be realized in the next 5 to 10 years. Vori's story is a microcosm of the technological overhaul of a trillion-dollar physical industry, revealing that in the era of AI, the greatest opportunities may lie hidden in the oldest and seemingly inconspicuous daily operations.

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